Attention!!! Pro Sports Daily will be down on Wednesday morning from 5:00am - 7:00am eastern time for database maintenance. All Sports Direct Inc. properties will be down during this scheduled outage.
Sorry for any inconvenience that this outage may cause.

If this is your first visit, be sure to
check out the FAQ by clicking the
link above. You may have to register
before you can post: click the register link above to proceed. To start viewing messages,
select the forum that you want to visit from the selection below.

Pirate Economics

SEIZURES of ships by pirates off the coast of Somalia may be down in recent months, but the interest of social scientists and economists in the country is undiminished. Because the place has been so stateless for so long, it provides a testing ground for theories about how people behave in the absence of meddlesome government. One such question is how two parties bargain when neither has good information available. Negotiations between shipowners and Somali pirates fit that description well.

Economists have been interested in the free-market ways of pirates for a while. Last year a team of three published a paper drawing on data from more than 10,000 negotiations that took place from 1575 to 1739 between North African pirates on one side and monks acting for Spanish families on the other. They found that the Spanish managed to pay lower ransoms by dragging talks out. Data on the activities of present-day pirates in Somalia are more, well, patchy. To fill the gap, the authors of a new paper gathered data from pirate negotiators.

They found that Somali pirates pretend to be more sophisticated than they are, whereas shipowners pretend to be poorer. Nowadays both sides have an interest in a speedy resolution, since a prolonged negotiation incurs costs. For the shipowner, the cargo spoils and the ship goes unused. For the pirates, the captured crew must be fed and the ship guarded. And pirates cannot last long without a resupply of qat, which is to them as rum is to Captain Jack Sparrow. Settle too quickly, though, and one side or other is likely to get a poor deal.

Government intervention can create perverse incentives. Spain paid a ransom of $1.2m for a fishing boat, the Playa del Bakio, in 2008ómore than twice the amount previously paid for a vessel of that type, setting a new floor price. Indeed, although the number of ships taken is down, the pirates have adjusted by charging more per release. There are also signs that they are moving inland, grabbing aid workers and other foreigners far from the guns of the US Navy.

I know this isn't directly political, but I did find it to be interesting and didn't want to waste in on the GD forum. There is a slight bit of politics in it near the end so I'm safe on that front. The Economist is by far one of my favorite reads.

The other side of the story, specifically with the Somalia pirates, is that a good portion of their way of life/economy was destroyed in good part to the dumping of nuclear waste, and the overfishing of their coastal waters.

Many of the people who couldn't fish anymore b/c the water was so polluted eventually turned to hijacking vessels as a much greater means of making money. I don't condone it, of course...but I support hearing both sides of the situation.